Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.Lotto Leggenda Osaka - Sneakers - Men Lotto Leggenda Sneakers online on YOOX United Kingdom - 44931050HXCorvari Ankle Boot - Women Corvari Ankle Boots online on YOOX United Kingdom - 11405075FP , Robert Clergerie Loafers - Women Robert Clergerie Loafers online on YOOX United Kingdom - 11337794NB , N3m Noitremilano Sandals - Women N3m Noitremilano Sandals online on YOOX United Kingdom - 11136197HD , Tricker's Ankle Boot - Women Tricker's Ankle Boots online on YOOX United Kingdom - 11466686SR , OTAZUA 6765 BOTíN PLANO DE MUJER , Ovye' By Cristina Lucchi Sandals - Women Ovye' By Cristina Lucchi Sandals online on YOOX United Kingdom - 11563731GV , ladies Balenciaga Red / Grey Sneakers Known for its excellent quality , Tory Burch Coral Floral Multi Thong with Signature Detail Sandals , LADY Teva Black Style #1000095 Wedges First group of customers , Men/Women La Canadienne Mindie Boots Many stylesecco IRVING - Trainers - black , Jonak TREVIS - Slip-ons Colour: indios bordeau , men/women Born Nectar Heels Perfect processing , River Island Wide Fit Slip-onsmen/women Kenneth Cole Reaction Desert Canyon Boots Price reductionDr Martens | Dr Martens 3989 Black Stacked Brogues , men/women Steven NC-Kore Heels At a lower priceadidas Performance MUNDIAL TEAM - Astro turf trainers Colour: black/running red/whiteMen/Women ASICS GEL-Quantum 180 2 MX Sneakers & Athletic ASICS King of quantityElata Court - Women Elata Courts online on YOOX United Kingdom - 11459094RL , Michelediloco Sandals - Women Michelediloco Sandals online on YOOX United Kingdom - 11376894OD , Nylo Ankle Boot - Women Nylo Ankle Boots online on YOOX United Kingdom - 11538318EQGiuseppe Zanotti Sandals - Women Giuseppe Zanotti Sandals online on YOOX United Kingdom - 11524022DS , Carla G. Court - Women Carla G. Courts online on YOOX United Kingdom - 11522986LI , Bernie Mev. Sneakers - Women Bernie Mev. Sneakers online on YOOX United Kingdom - 11237664VRThe first batch of customers' comprehensive specifications Imagine Vince Camuto JalenHighly praised and appreciated by the consumer audience Hey Dude JoyceSuperfeet Crane They'll Crane their necks over to admire your new Superfeet shoes! Casual and comfort wear has evolved with SuperfeetWOMEN Brooks Brothers Navy Equestrian Sandals Preferred material ,
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.